Asked by drishika gulati on Jun 29, 2024
Verified
The high and low points used in the high-low method tend to be unusual and therefore the cost formula for the mixed cost may not accurately represent all of the data.
High-low Method
A technique used in cost accounting to determine the variable and fixed components of a cost by analyzing the highest and lowest activity levels.
- Identify and analyze the limitations and strengths of various methods used in cost estimation.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
True
Explanation :
The high and low points used in the high-low method may not be representative of all the data points, as they could be outliers or affected by other factors. As a result, the cost formula derived from the high-low method may not accurately represent all of the data points and may lead to errors in cost estimation.
Learning Objectives
- Identify and analyze the limitations and strengths of various methods used in cost estimation.
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